“Century-old Truth: Luxury Cars and Mansions, The Untold Story of Hua Xi’s ‘First Village’”

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Huaxi Village in Jiangsu used to be the shining “Number One Village in the World”. In the late 1990s, luxury cars filled the streets, villas clustered together, gaining fame both domestically and internationally, lauded by the Chinese Communist Party as a golden signboard of “collective economy” and “socialist new rural areas”. However, like a dream, in 2023, the per capita debt of Huaxi Village soared to 13 million yuan, its glory faded, and ultimately was taken over by a state-owned enterprise of the Chinese Communist Party.

Why did this “Number One Village” fall into the abyss? What is its relationship with the Chinese Communist Party? Today, based on domestic and foreign reports, we will reveal the truth behind this legendary story.

Huaxi Village is located in the west of Huashi Town, Jiangyin City, Wuxi City, Jiangsu Province. In the 1960s, like other rural areas in China at that time, the per capita annual income here was less than 20 yuan, and the villagers struggled to make ends meet year-round.

Later, Wu Renbao, who had served as a “national cadre” of the Chinese Communist Party, was transferred here to serve as the secretary of the brigade. At a time when the whole country was developing the so-called socialist economy, Wu Renbao secretly set up a small mill and a small hardware factory.

In the 1980s, when the countryside nationwide responded to Deng Xiaoping’s call for the household land contract reform, Wu Renbao did not follow suit. Instead, he insisted on the path of expanding and strengthening the collective economy, because he believed that with limited land, the amount allocated to each person was too small to accomplish anything significant, and only industry could bring wealth.

The real turning point for Huaxi Village came in March 1992 during Deng Xiaoping’s Southern Tour. According to the Chinese Communist Party’s official media People’s Pictorial, at that time, Wu Renbao said, “Deng Xiaoping spoke, emphasizing the need for economic development.”

Official reports say that he further judged that economic development would inevitably lead to a rise in raw material prices. So they adopted a strategy of “borrowing heavily”, borrowing over 20 million yuan, and obtaining another 60 million yuan in bank loans to purchase large quantities of raw materials like steel billets.

After Deng Xiaoping’s Southern Tour speech spread throughout China, raw material prices soared. There were widespread rumors that “Wu Renbao held a meeting and made a billion in profit”.

This situation was not simple. At that time, 10 million yuan was equivalent to approximately ten billion yuan now. It was not something ordinary people could achieve to obtain such a huge loan of 60 million yuan. It showed that Wu Renbao likely had certain connections at that time. His ability to predict the rise in steel prices and acquire large quantities of steel was likely due to insider information.

A person close to Wu Renbao revealed that at that time, Wu Renbao obtained a batch of cheap equipment and raw materials from a state-owned enterprise, including a large amount of cheap scrap rail steel. After the steel price rose, he sold it at a higher price. This indirectly confirmed that Huaxi Village’s rise was actually based on connections and insider information.

Huaxi Village’s development model was known as the “Huaxi Model”, with collective economy at its core.

Starting from the 1980s, Wu Renbao established a distribution system for Huaxi Village called “two-eighths” and “one-three-three-three”. The “two-eighths” meant that after enterprises exceeded the annual goals set by the group company, 20% would be retained for reinvestment into the enterprise, and 80% would be used for bonus distribution. The bonus distribution followed the “one-three-three-three” principle – 10% to the factory director, 30% to the factory management team, 30% to the workers, with the remaining 30% reserved for public accumulation within the enterprise.

Additionally, the income of Huaxi Village residents comprised of “wages + bonuses + benefits”. The bonuses were actually not paid out to the workers in cash but were invested as shares in the company, and starting from the second year, dividends were paid out based on the shares. The longer the time, the more dividends from the shares.

Through this distribution system of “less distribution, more accumulation, less cash, more shares”, it meant that villagers actually did not receive much money, as the money was concentrated in the hands of the village committee.

Mainland media reported in 2018 that Huaxi collectively owned about three-quarters of the shares, while the individual villagers held about one-quarter of the shares.

In the Chinese Communist Party’s propaganda, the prosperous Huaxi Village became a typical example of the new rural area, making many people envy the happy life in Huaxi Village. However, information disclosed by Huaxi Village residents themselves revealed that they were actually not free. What outsiders saw was just a manufactured happiness.

For example, a netizen who left Huaxi Village disclosed to BBC Chinese that although the Huaxi Village Group distributed bonuses to villagers annually, only 20% was paid in cash, while the rest was directly deposited into the Huaxi Village committee. Villagers had to submit applications to the village committee for major events such as marriage to withdraw the needed funds, and the village committee often reduced the payment amount under the pretext of strict economy, such as approving only 40,000 yuan out of an application for 100,000 yuan.

Another person who left Huaxi Village mentioned that if villagers wanted to use the money from their own shareholding, they had to apply to the village committee, and only after the approval of the committee could they withdraw. Except for a limited amount of pocket money, all other expenses had to be approved by the village for disbursement. Even the pocket money was not in cash but in Huaxi Village vouchers, which could only be used in stores operated by the village.

Villagers and workers in the enterprises in Huaxi Village had almost no holidays, and they had to work on Saturdays and Sundays, with only two days off during the New Year. Villagers had to request leave from the factory when going out. Villagers were under centralized management, strictly forbidden to contact outsiders, and had to seek permission even to enter or leave the village.

Villagers were not allowed to engage in small businesses, not even opening a small shop.

The propaganda of Huaxi Village having “everyone drive luxury cars and live in villas” was misleading. Although the houses and cars were distributed by the village, the property belonged to the village, and the money earned by individuals was retained in the collective account.

A person familiar with the situation in Huaxi Village told the BBC that children of villagers attended school for free, from elementary school to university, and even for studying abroad. However, children of villagers could only attend schools run by Huaxi Village, and the Huaxi Village’s self-operated high school ranked poorly in Jiangyin City. If villagers wanted to send their children to better schools, they could only leave Huaxi Village to seek their own paths.

Even if villagers wanted to leave Huaxi Village, it was not easy, as the village committee would calculate the debts one owed. With considerations including housing, cars, and education expenses, almost every family owed the village hundreds of thousands of yuan. As a result, ordinary people usually chose to stay.

The creator of Huaxi Village, Wu Renbao, was a national representative of the Chinese Communist Party in the sixth, seventh, eighth, tenth, and eleventh sessions, and was received by the Chinese Communist Party leaders Jiang Zemin, Hu Jintao, and Xi Jinping. These three Party leaders also visited Huaxi Village.

In March 2013, Wu Renbao passed away due to lung cancer, and the then-Chinese Communist Party leader Hu Jintao sent a wreath.

By that time, Huaxi Village, the “Number One Village in the World”, had almost become the family property of the Wu family. Wu Renbao’s fourth son, Wu Xie’en, succeeded him as the village party secretary.

Data from reports showed that Wu Renbao’s four sons were able to control 90.7% of Huaxi Village’s funds, and there was a distinct income gap among village leaders, cadres, and villagers’ families, with disparities ranging from tens of thousands to hundreds of thousands, or even more.

Among the 50 plus-member Huaxi Village Party Committee, the circle centered on the Wu family consisting of 36 people. Wu Renbao’s four sons, a daughter, and several other family members have either been former or current members of the Communist Party Committee in Huaxi Village. His four sons simultaneously held positions as the heads of real estate, tourism, catering, and other companies in Huaxi Village. It is no wonder that people have been questioning whether Wu Renbao was creating a “family empire”.

As early as 2007, a mainland writer penned an article titled “The Secret of the Number One Village”, revealing that Huaxi Model, touted as guided by “Mao Zedong Thought” and established under the banner of “public ownership”, was actually a “scam” combining personal dictatorship, family control, and hereditary rule.

In 2014, the second year after Wu Renbao’s death, Huaxi Village’s long-standing steel industry saw a sharp decline in revenue.

His son, the “second generation official of the village” Wu Xie’en, initiated a transformation for Huaxi Village, focusing more on financial investment and high-tech industries.

According to those familiar with the situation in Huaxi Village, at the time, posters were put up in various surrounding villages, urging residents to deposit their money into Huaxi Jinta, promising fixed-term deposits of three years or more with interest rates ranging from 10% to 15%, while the bank’s interest rate was only around 4%. This attracted a large number of people from Jiangyin City, Shanghai, and Heilongjiang to come to Huaxi Village to make deposits.

However, rumors of Huaxi Village’s financial difficulties and impending bankruptcy began circulating in 2019.

According to reports from the magazine “Finance and Economics”, in February 2021, there was a video clip circulating online showing “a large crowd lining up in the square of Huaxi Village, apparently conducting financial procedures in the rain”. Some people stated that after queuing for several hours, they only received the principal. Some received both the principal and interest, but the interest rate was only 0.05%, not 10%.

This sparked panic among villagers, resulting in a run to withdraw funds to “safeguard their principal”.

By September 2023, Huaxi Village had reached a per capita debt of 13 million yuan, and 80% of Huaxi Shares were acquired by “Lianhua Fund” under the Jiangyin Municipal State-owned Assets Supervision and Administration Commission.

The “myth” of Huaxi Village was mercilessly shattered.

The reason why Huaxi Village’s shares were taken over by a state-backed company was because the village was the face of the Chinese Communist Party. The Chinese Communist Party could not allow it to go bankrupt, as it would be a slap in its face, in the face of socialism, and in the face of the Communist Party leaders.

The model of Huaxi Village matched the preferences of the Chinese Communist Party officials who favored performance projects. They aimed to create a sample of “socialist public ownership” and the so-called “common prosperity” through this village.

The rise, development, and decline of this demonstration village actually reflect the essence of the Chinese Communist Party regime.

Huaxi Village rose from insider information and connections, grew and expanded with support from the Chinese Communist Party.

The entire operational mode of Huaxi Village mirrors the way the Chinese Communist Party controls the Chinese society, locking people in a closed environment and requiring a price for those who seek to leave.

The family management model of Huaxi Village is akin to the control by red second-generation and third-generation members of the Communist Party in China.

The Chinese Communist Party boasts of public ownership, proclaiming that all wealth belongs to the people, yet, in reality, the people only get a small portion. While Huaxi Village still provided housing and cars to the villagers, ordinary Chinese could only become “house slaves” and “car slaves”, emptying their pockets to buy houses and becoming the peons of the Chinese Communist Party.

Even with the support of the Chinese Communist Party, Huaxi Village still failed. The fate of areas without such robust support can be imagined. The bankruptcy of Huaxi Village foreshadows that socialism is fundamentally unworkable, and the Chinese Communist Party is bound to fail.

Apart from Huaxi Village, during the Cultural Revolution era, there were villages like Xiaojinzhuang and Dadaizhai, and in the early days of reform and opening up, there was Daqiu Zhuang, all once hailed as China’s “Number One Village”. These so-called “Number One Villages” all ultimately ended in failure.

Well, today’s program ends here. Thank you for watching, we’ll see you next time.